Inside Asian Gaming

September 2009 | INSIDE ASIAN GAMING 53 Silver Heritage up good quality venues, getting market- appropriate equipment and in effective marketing and promotion of the sites. Silver Heritage now directly operates gaming lounges in nine venues in four Asian countries. The sites are mostly in licensed casinos but one is on a cruise ship that sails in Asian waters. The venues are in: Laos (four, including the company’s own “Club 19” Dansavanh at the Dansavanh Nam Ngum Resort); Cambodia (three, including at NagaWorld, Phnom Penh’s only licensed casino, operated by Hong Kong Stock Exchange-listed NagaCorp); Singapore (the cruise ship) and The Philippines (one venue in Manila). Sports to slots The transition from sports betting into operation of electronic gaming machines (EGMs) was driven by casinos’ demands for new ideas to feed their growing operations, recalls Mr Shepherd. That shift of operator focus was in many cases a consequence of sports betting becoming regulated and being designated as a non-casino monopoly in many parts of Asia. In 1999, theMacau government awarded Macauslot the sole licence to operate sports betting in that Special Administrative Region of China. Although the business generated just US$38 million in 2008, the monopoly was recently extended for another year—to the disappointment of many executives in the city’s integrated gaming resorts. In 2002 the Hong Kong government issued an ordinance that amended the Hong Kong Jockey Club’s gaming licence, allowing it to organise and promote online and retail betting on local and foreign soccer matches. HKJC began offering such services commercially in 2003. The move was in response to the perceived growth of unregulated and unlicensed soccer betting in the territory. HKJC’s previous remit was confined to the promotion of horse racing, horse race betting, lottery promotion and lottery betting. By the time of the 2007/08 soccer season, sports bettingwas generating an impressive US$4 billion annually for the Jockey Club. Takinga lead fromHongKong, Singapore also decided to regulate its sports betting market. The sole licence in Singapore was granted to Singapore Pools, recalls Mr Shepherd. “The market for casino-based sports betting still exists in Asia, but it has become more of a niche product,” he adds. “Casinos still continue to request sports betting and SHL remains one of the niche providers of this product to licensed casinos inAsia. At the same time, the small casinoswe worked with were growing up and wanted new ideas—one of the product categories we introduced was slot machines.” Raising US$150,000 as start-up capital for the new product line, Silver Heritage purchased 30 reconditioned machines in mid 2004 from New South Wales, Australia, and operated them in Dansavanh. The initial investment was recouped in six months and a new business was born for Silver Heritage. Mr Bolsover said: “While slots are far more capital intensive than sports betting— which might have cost us US$10,000 per installation to set up with a couple of plasmas, a PC screen and a bit of time—they are, potentially, a much bigger business.” Silver Heritage’s best performing gaming machines (server based roulette) gross as much as US$450 per machine per day in the best performing venue, says Mr Bolsover. Server based option As of 30th June this year the company has 730 machines installed in nine venues in four Asian countries. They generate gross revenues of more than US$2 million per month across all 730 machines, says the company;andafurther120-plusarecurrently being redeployed in existing locations to optimise returns. It adds that despite the current challenging economic conditions it sees immediate expansion opportunities in all four existing markets. Silver Heritage says it will be operating in 14 venues by the end of the year and sees expansion potential in Vietnam and India. Around 30% of its installed machines are controlled by computer servers, states the company. Silver Heritage says it leads in supplying this server-based distribution technology in Asia thanks to a partnership with Inspired Gaming, an AIM-listed UK company. Silver Heritage says its ability to offer server-based gaming has been a major deciding factor for operators in a number of slot operation deals. Server based gaming is not only a delivery systembut also a separate product category in its own right, with its own compliance requirements, points out Silver Heritage. The tie-up with Inspired Gaming happened because Silver Heritage was proactive in seeking market opportunities and new business partners for the region— another thing that sets it apart from its competitors, says Mr Bolsover. “We went to Inspired and said ‘You Multi-player roulette (left) and slots (right) inside the Club 19